OCC Clarifies How Banks Can Issue Regulated Stablecoins Under GENIUS Act

Key Insights:

• OCC launched a 60-day public comment window on GENIUS Act draft rules in the latest stablecoins news.
• Only “permitted payment stablecoin issuers” could issue payment stablecoins in the U.S.
• Everyone else would be barred from issuing U.S. payment stablecoins.
• AML/sanctions rules come later; the Act kicks in in 18 months or 120 days after final rules.

The Office of the Comptroller of the Currency moved on Wednesday to translate the GENIUS Act into day-to-day rules for payment stablecoins. The agency released draft regulations describing how these tokens would be issued, backed, and supervised under OCC oversight.

OCC Unveils Draft Regulations to Operationalize the GENIUS Act

The OCC also opened a 60-day public comment period through a notice of proposed rulemaking to operationalize the Genius Act for stablecoin issuance. It said it wants feedback on the full lifecycle of a payment stablecoin, from launch and reserve management to supervision and, if necessary, an orderly wind-down.

The proposal is designed to implement the Guiding and Establishing National Innovation for U.S. Stablecoins Act, known as the GENIUS Act. The law became effective last July and set the first federal stablecoin framework in the U.S.

At the center of the statute sits a strict gate. Only a permitted payment stablecoin issuer can issue a payment stablecoin in the United States. The law also blocks digital asset service providers from offering non-compliant stablecoins to U.S. users.

Musheer Ahmed, founder and managing director of Finstep Asia, said the rules would bring stablecoins closer to traditional finance. He said the framework adds heavy oversight and deeper connections to the banking system. He also said the U.S. market could attract regulated stablecoins from non-banks, payments firms, and crypto institutions, especially for tokenized traditional finance use cases.

Stablecoin News: The Right Standards for Asset Reserves When Issuing Stablecoins

The OCC’s draft focuses on core safeguards that will guide the GENIUS Act. It sets reserve asset standards and requires redemption at par. It also calls for liquidity and risk controls, audits, supervisory exams, and clear custody rules.

In addition, it outlines application pathways for new issuers. The proposal also introduces a capital and operational backstop and updates parts of the OCC’s capital adequacy and enforcement toolkit.

The agency also defined who it intends to police. It said it would have regulatory or enforcement authority over certain permitted payment stablecoin issuers, including subsidiaries of national banks and federal savings associations, federally qualified issuers, and some state-qualified issuers.

The draft also extends oversight to foreign payment stablecoin issuers. It could bring offshore firms under U.S. supervision if they want access to American users.

One major area remains outside this package. The OCC said Bank Secrecy Act and sanctions requirements will come separately in coordination with the Treasury Department.

GENIUS Act News: New Guardrails Target Spillover Effects from Stablecoin Yield Products

Meanwhile, banking groups have warned about spillover effects. Last August, while discussing the GENIUS Act, they urged Congress to close what they called loopholes, arguing that third-party yield products tied to stablecoins could pull deposits out of banks.

OCC Chief Jonathan Gould dismissed the idea of a sudden deposit crisis, saying any material outflow would be visible and would not happen overnight.

In essence, regulated stablecoins could prove durable in stress. For instance, the requirement for 100% reserves to support one-to-one redemptions, compared with bank capital ratios that often run closer to 10% to 20%.

In an extreme scenario, he added, the Federal Reserve could still matter as a backstop indirectly, by supporting the reserve assets stablecoins hold, including U.S. Treasuries and cash equivalents.